Energy Transfer has quietly become one of the biggest natural gas suppliers to AI data centers, locking in multi-year contracts with Oracle, Entergy, and other customers racing to power AI computing. The buildout is fueling pipeline construction and supporting the company's plan to keep raising its payout.
Energy Transfer has become one of the biggest natural gas suppliers to data centers powering the AI boom, using its nearly 107,000 miles of pipelines to move gas from supply basins to demand centers.
Deals stack up across data centers and utilities
Energy Transfer's biggest deal covers cloud giant Oracle: the company will supply about 900,000 Mcf/d of natural gas to three of Oracle's US data centers, with gas at one site powering Bloom Energy's fuel cells. It also signed a 150,000 Mcf/d deal to supply Nexus for an AI hyperscale campus under construction. Separately, it agreed to support a 900-megawatt AI factory campus for Crusoe, plus a 150,000 Mcf/d supply deal for a data center site in Arkansas.
The company is also selling more gas to utilities. It signed a 20-year deal with Entergy for at least 250,000 MMBtu/d starting in December 2028, gas Entergy needs to power data centers Meta Platforms is building in Louisiana. Energy Transfer is separately supplying 300,000 Mcf/d combined to four new gas-fired power plants in Oklahoma by the end of 2028.
Pipeline laterals fund larger builds
Most of these projects need only a lateral pipeline connecting Energy Transfer's existing network to a new data center or power plant, a low-capital build the company says generates strong returns. Rising gas demand is also supporting larger construction: Energy Transfer has the $2.7 billion Hugh Brinson pipeline underway in Texas and the up to $5.6 billion Desert Southwest pipeline in Arizona, both aimed at data center and power demand growth.
Growth outlook carries permitting risk
Energy Transfer expects to grow adjusted EBITDA by at least 17.5% this year, with projects entering service through early 2030. That growth visibility supports the company's plan to raise its distribution, already yielding over 6%, by 3%-5% annually. But a permitting issue will delay one Oracle-linked pipeline project by six months, and the company expects further delays tied to local opposition for future data-center developments.
Source: The Motley Fool
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